Tea to turn costlier by 15% as output falls

The Tea Board is yet to come out with figures, industry executives said they expect April 2016 production to be less by 10-15%Sutanuka Ghosal | ET Bureau | May 09, 2016, 16:46 IST

Experts said packet tea players are expected to purchase tea from the market in the middle of May, a situation which will firm up the market further.A drop in tea production in Assam and West Bengal in April is likely to push up prices of tea this month to at least 15% above March rates when there was oversupply, say experts. Tea production had grown by 56% in March due to favourable weather conditions.

Experts said packet tea players are expected to purchase tea from the market in the middle of May, a situation which will firm up the market further.

“In March, production was up as early rains had improved the crop production. But incessant rains in Assam and a dry spell in Dooars and Darjeeling in West Bengal have impacted production of first flush teas in April," Azam Monem, director of McLeod Russel India, told ET. "End March prices dipped because of oversupply. But since April crop was affected, the supply will be less in May which will firm up prices."

In April 2015, India had produced 75.61 million kg of tea. Though the Tea Board is yet to come out with figures, industry executives said they expect April 2016 production to be less by 10-15%.

Domestic tea production in March grew 56% year-on-year to 68.34 million kg, according to estimated production data of the Tea Board. In March, Assam produced 31.29 million kg of tea, up 163% from a year ago. West Bengal, which has tea-producing regions of Darjeeling, Terai and Dooars, produced 20.48 million kg of tea in March compared to 14.45 million kg produced in the corresponding month last year. South India's production fell 8.33% to 15.30 million kg in March.

Tamil Nadu, Kerala and Karnataka had together produced 16.69 million kg in March last year. Packet tea players like Ramesh Chand Agarwal, managing director of Mohani Tea, said from mid-May prices of CTC tea quality will shoot from 160kg to Rs 140 kg in March. Mohani Tea, a major north Indian player, has already used up its old stock of tea. "We need to buy fresh tea from next week. Prices will be up but we will not pass on the price rise to our consumers," Agarwal said.

Parag Desai, executive director of Wagh Bakri Tea said prices may rise because of speculation. "There was a good crop in March. The impact of rains will not be much as far as tea production in Assam is concerned. We have spoken to the weather department and there will be no shortage of tea this year. Volumes will be good and, we do not see prices shooting up suddenly," Desai said.